Development

Opponents square off over Supreme Court property rights decision

OnPoint

Aired: Thursday, July 28, 2005

The Supreme Court recently upheld a Connecticut city's decision to take private property for use in an economic redevelopment project, with a 5-4 decision that has been hotly debated since it was released last month. Is the ruling an expansion of the government's eminent domain powers? Will the decision lead to more takings in other cities, or are property rights advocates overstating the potential fallout? How are state and federal lawmakers reacting to the decision? Scott Bullock, a senior attorney with the Institute for Justice, who argued the case before the high court, and Paul Farmer, executive director of the American Planning Association, go head to head over Kelo v. the City of New London.

Transcript

Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining us today is Paul Farmer, the executive director of the American Planning Association. Also with us is Scott Bullock, senior attorney with the Institute for Justice. Gentlemen thanks a lot for being here today.

Scott Bullock: Thank you.

Paul Farmer: Thank you.

Brian Stempeck: We're here to talk about a major Supreme Court decision we saw last month. It was a 5 to 4 decision that basically upheld the actions of the city of New London, Conn., in taking some property for economic development. Scott, I wanted to ask you, I know you were unhappy with the decision. You are one of the attorneys at the Institute for Justice who argued the case and this is a quote I saw from you in the newspaper, it said, quote, "Every home or church could be replaced by a Costco, a shopping mall or private building that would produce more tax dollars." Is that really true? What's your feelings on how the court ruled?

Scott Bullock: It is true and Justice O'Connor made the same point in her dissent. She said under the court's ruling a Motel 6 can be taken for a Ritz-Carlton, a home can be taken for a shopping mall, any farm can be taken for a factory. Those aren't hypotheticals, those unfortunately are actually happening. Just two weeks ago the village of Sunset Hills, Mo., approved the taking of 85 homes and small businesses to build a shopping mall. Lower tax producing businesses are taken for higher tax producing businesses. This is happening in America. The Supreme Court gave its stamp of approval to it. I think it was a terrible decision, but the good news is that this has really awakened people to what is happening with eminent domain abuse and you're seeing a number of efforts by state legislators and citizens fighting back against this decision.

Brian Stempeck: But haven't we been seeing this for quite some time? I mean typically when you talk about eminent domain it's a city or a state taking property for a railroad, for a utility, for things like that, for power lines. In this case, it's for private development, but this has been going on for some years. Whenever they build a baseball stadium it seems like something like this happens. What's new about this case that stands out from what's been happening for the past 20 or 30 years?

Scott Bullock: Well, what is new about this is that the Supreme Court for the first time said that the government can take land and use eminent domain purely for private economic development. Its decisions before said that they could take land in so-called blighted neighborhoods, but here there was no finding of blight. There was no allegation this neighborhood was blighted. It just happened to be desired by the city and private developers. So for the Supreme Court to say that it doesn't matter the condition of your property, it doesn't matter where it is, for the government be able to use eminent domain to take it and give to other private parties is an expansion of eminent domain authority and it's something that has rightly alarmed home and small business owners throughout the country.

Brian Stempeck: Paul, what's your reaction to the case? The American Planning Association was one of the groups that sided with the city of New London. Is what Scott's saying true? Could a shopping mall developer, can they now come in and take over a church?

Paul Farmer: I don't think what he's saying is true at all. I think that it's a vast overstatement of what the Supreme Court said. I think you need to read the majority decision. We don't believe it changed anything. People's property was no more at risk the day after the decision than the day before the decision. This is something that's gone back 200 years in practice. It's gone back in legal precedent for over a hundred years. The court had been ruling that property could be taken for economic development purposes long before they ruled that it could be taken in conditions of blight, which was 1954 in Berman v. Parker. The economic development cases go back way before that. We believe, and we said this in our friend of the court brief that this really is an issue that ought to be decided at the state level and the local level and we see that activity going on now. The Supreme Court simply said they weren't going to intervene so that federal courts became the places where these decisions were made. These decisions ought to be left close to home, close to the voters. We believe that a very robust citizen participation process is the best safeguard to see that any governmental authority is used correctly and we believe that's the case with eminent domain. We don't think that we need sweeping new laws. We didn't need a sweeping new law from the Supreme Court. We didn't get it. We do believe that many state laws can be improved. We did a lot of work for seven years looking at state enabling laws in a whole variety of ways and that information is free and available on the Web. We think there's some states that have very good state enabling laws regarding the use of eminent domain and that power. We think there are many that could be improved. So we stand ready to assist in a reasoned discussion of how to improve those.

Brian Stempeck: Scott, the city's basic argument in this case was that this is an area that's pretty underprivileged economically. The unemployment in the area was twice the average of the rest of the city. Why shouldn't city planners have the right to go in there and say we have a new development that's going to add a thousand new jobs? What's wrong with that argument?

Scott Bullock: Well it's fundamentally un-American for the government to take property from one private owner and hand it over to another private owner just because the government happens to prefer that new owner and thinks that new owner would make more productive use of the land than the current owners would. There's nothing wrong with governments using whatever incentives they wish to encourage economic development and that's a policy choice that cities can make and choose to make. But when eminent domain is involved there are specific limitations upon that in the Constitution. The Constitution says very clearly private property shall not be taken for public use without just compensation. So there's a constitutional limit. Unfortunately, the Supreme Court did not apply at that constitutional limit. That's why it's now up to state courts, why it's up to state legislators to do this. You know the ironic thing about the situation in new London, and it's true in many of these projects, New London has ample land available in the Fort Trumbull area to do development projects. They have twice the land area available now to do development projects than New York has to rebuild the World Trade Center. The people who live there have about an acre and a half total of land. They can do development, but they can still respect the rights of these people and that's true in just about every situation I've seen.

Brian Stempeck: Paul, what's your reaction to what Scott is saying? I know that the majority of the decision, what they're saying is basically we think that economic redevelopment is in fact public use.

Paul Farmer: Right.

Brian Stempeck: Explain what the court meant by that.

Paul Farmer: Well the courts made very clear that they were relying on a hundred years of precedent, where that was the way that the clause of the Constitution had been interpreted. The majority decision made it very clear they were not interpreting the Constitution any differently than it had been for a hundred years. This was essentially a state's rights case that said we're not going to change. We're going to stay with the precedent we relied on and this is a matter that ought to be left to local government and a local government under their laws. We think that eminent domain should be used very, very sparingly. We are not in favor of any kind of widespread use. We think it should be monitored very carefully. We think that it should be used only in very, very open processes. California has a very good way of doing it, where they require development plans to be approved in very open processes before authorization would occur. We think that's a good way to do it. We think that there ought to be just compensation that goes beyond market value, because we think that you do need to compensate people for the years that they have held land, held property and invested in it and our brief said that. We think that there ought to be that type of additional compensation.

Brian Stempeck: Yeah, well --

Paul Farmer: But I'm sure there are lots of areas we probably would find that we agree on this.

Brian Stempeck: Now while Scott is saying this is basically an expansion of eminent domain, some people looking at this case have said, well maybe, hold on a second, the Supreme Court basically said -- New London city planners had a lot of documents they used to back up their decision to take this land.

Paul Farmer: Right.

Brian Stempeck: A lot of economic studies saying we need this for this type of development. Does this actually raise the bar for eminent domain, saying that if you're going to do this you need to justify it with these types of studies?

Paul Farmer: Oh I think you can read this as raising the bar. I think one commentator called this a yellow blinking light. I think it says that you need to be very careful and that you need to show that you have the proper studies. You have had the public processes that have allowed imports of all parties into this. These are very critical decisions and these are very critical decisions whether it's being done for economic development or a highway for example. And many, many more homes have been taken for highways as an example, than for economic development of this type we're talking about.

Brian Stempeck: Scott, what's your reaction? I mean do you agree with that? That this could actually limit the use of eminent domain in some places?

Scott Bullock: Well I think there's very few limits that have been imposed by the Supreme Court upon this. I think the emphasis in the majority opinion on there being a plan in New London was really disconnected from reality. Virtually every situation of eminent domain for private development is done according to a plan. The government puts together a plan. The developer puts together a plan. That's really no check on the fundamental question of whether you're going to use eminent domain for private economic development. That should not be a hard question. An overwhelming majority of people in this country are opposed to this, as just about any poll that has come out in the wake of this decision demonstrates. People are opposed to this. This is an issue that cuts across party lines, cuts across ideological lines. People just simply think it's wrong to take somebody's home and give it to Costco or take a smaller business and give it to a larger business. And I think you're finally now going to see some real momentum in state legislatures to change the law in the legal institution.

Brian Stempeck: Wait a second. I want to follow up on this. Let's use an example that's close to home here. In Washington we're going to be building a new baseball stadium --

Scott Bullock: Yup.

Brian Stempeck: -- in the southeast part of the city and probably going to see a scenario similar to this, where the city basically has to get some land from some homeowners who don't want to leave or some property owners who don't want to leave that area in order to build the stadium. How do you get that job done? How do you build that stadium without invoking eminent domain?

Scott Bullock: Well stadiums are kind of a separate category. Stadiums are typically public bodies. They're public entities, or at least they're largely controlled by public bodies, at least many stadiums are, probably most of them are. So if it's publicly owned or the public has equal right of access to it, that's a public use. There are certain situations -- a stadium up in Massachusetts, the courts struck down because it was essentially done for one private party and the private party had total say over how the stadium was going to be used. So that's a separate category. I'll tell you another instance of eminent domain abuse that's happening in our nation's capital is the city of Washington wants to take a shopping mall in southeast Washington that's fully leased, servicing its customers, because they want more high end retail in that section of the city. So that's a classic example of taking from one private owner and handing it over to another private owner and that's what's been opened up in the wake of the court's decision.

Paul Farmer: Let's follow the distinction that Scott's trying to make. As I understand it, you wouldn't be able to take property to provide, let's say, grocery shopping for poor people in inner city neighborhoods, but it's OK to take property so you can build a baseball stadium so people can sit in sky boxes. And as I understand it, the Texas Rangers had eminent domain used on their behalf when they built their ballpark and I think we know who was a managing partner of the team at the time. And the Texas bill that has gone through the Legislature, that it's not yet approved because the two houses couldn't reach agreement, exempted sports arenas from the prohibition against the use for economic development. I think that one of the things that shows is the very difficult distinctions that have to be made and those distinctions have to be made, that's what legislatures have to do. They're very difficult to do. Again, our approach is let's have a very reasoned thoughtful way of looking at that through the state legislatures. There's some very good existing models out there to look at. Don't rush just to sort of make political points so that you can either get a bill passed or are even if you don't, be able to use that in your campaign for reelection the next time you're running.

Brian Stempeck: You're of course talking about some of the state legislatures, but we are seeing a big reaction right now on the federal level. A lot of members of Congress have come out saying they don't like this bill. There's been a half a dozen bills introduced to deal with the decision in different ways. Scott, if you could talk a little bit about some of the legislation that's out there and what it would do. How can a U.S. member of Congress tried reverse this decision?

Scott Bullock: Well, Congress can't reverse the decision.

Brian Stempeck: Right.

Scott Bullock: It's an interpretation by the Supreme Court of the U.S. Constitution and the Supreme Court has final say on that, but Congress can do something that can be very effective and that is to limit or eliminate federal spending for projects that use eminent domain for private development purposes. There's a number of pieces of legislation that's pending. They've got something that will demonstrate that Congress is against the use of eminent domain for private development and I think you're going to see some real momentum, hopefully when Congress reconvenes, to get some of this legislation passed. We know of at least 26 states that are looking at this and in a vast majority of these cases this is an easy call. You know, a roadway, a public facility, a courthouse, that's a public use. Costco is not a public use, Novis Development Corporations, $165 million shopping mall in Sunset Hills isn't a public use. These are very easy calls in a vast majority of cases to make and the lines can be fairly easily drawn.

Brian Stempeck: Paul, what's your reaction to that?

Paul Farmer: The Supreme Court has spent 200 years trying to make these distinctions and I think it's interesting that for Scott it's an easy distinction to make, because the Supreme Court has not been able to find so easily that they can make that distinction. And even this case, when you look at the various opinions, the concurring and dissenting opinions, you see this back and forth as they try to craft what the distinction should be. We go back to the fact, again, that you need to work very carefully as you look at these laws. This is not something to rush in on with a lot of sentiment and the like. These are decisions that will change 200 years of practice. These are decisions that could change a hundred years of the legal precedents. It just needs to be done very, very carefully and I would like to say that something the Supreme Court made very clear is that it is absolutely the law the land that if Costco spotted a piece of land and said I want that piece of land. Now would you use eminent domain to take those houses for me? This Supreme Court decision says absolutely not. That can't be done. That it's only after you go through a public process and determine what your needs are that you then can assemble the land.

Scott Bullock: I don't think that's what the Supreme Court says in this case. I don't think there's any limit on that whatsoever. Costco, and we've seen this time and time again, developers can come up with ideas, citizens can petition governments for what they want to do and if the government goes through a process and they say this is what we want done -- New London's a perfect example of that. Pfizer Corporation went to New London and said we'd like to have these things in the redevelopment area. We'd just like to have them. This is what we would like. The city said all right, we'll go through the process. They added everything that Pfizer wanted, they had the public hearings, they went through with the process and at the end of the day everything that Pfizer wanted in this neighborhood was made a part of the plan. So I think that the court puts no limits on that whatsoever and that's why it is so vital for legislatures to step in and say that eminent domain simply should not be used for private development purposes.

Brian Stempeck: Paul, your response?

Paul Farmer: Well, you're re-arguing the point you lost on before the Supreme Court. You made those same arguments. The Supreme Court rejected that --

Scott Bullock: And the court got it wrong.

Paul Farmer: -- argument and so I think that --

Scott Bullock: The court got it wrong.

Paul Farmer: Well I think the court got it right after 200 years of getting it right and I think that you're trying to go and take the law to a place it has not been in 200 years. It's a radical change in the law you're seeking and we believe that the property system in this country works very well. It's worked very well for many, many people over many years and you shouldn't make radical changes in the property system of this country without sufficient thought.

Brian Stempeck: We're running out of time, so I'm going to have to stop you guys there. I've got one last question for you both, maybe we can agree on this one. They're talking about taking Judge Souter's house in New Hampshire and turning it into a hotel, perhaps calling it the Lost Liberty Hotel with a restaurant called the Just Desserts Cafe. Some pretty bad puns there. What's going to happen to Judge Souter's place, take it or leave it? Paul?

Paul Farmer: I don't think that it's anything more than political grandstanding and it's freedom of speech and it's nice theater.

Brian Stempeck: Scott, are you going to be staying at this hotel?

Scott Bullock: We do want to focus on trying to save people's homes and small businesses, that's a distraction. We want to focus on the legislation. There's nothing radical about the Fifth Amendment to the U.S. Constitution.

Brian Stempeck: All right, well it sounds like I think Judge Souter might need a good lawyer. I'd like to thank you both for being here. I'm Brian Stempeck. This is OnPoint. Thanks for watching.